Balance. It’s not a word you hear often in American business these days.

What we hear, instead, sounds like excess and a lack of balance. “Record Profits.” “CEO compensation at all-time high.” “IBM misses profit targets, expected to eliminate 10,000 jobs.”

Most companies are motivated by a single goal: increasing shareholder value, often at great cost to other stakeholders. As Gordon Gekko told us in the mid-80’s movie Wall Street, “Greed is good.”
Is it?

How good is greed for thousands of people who are laid off every year in order to improve the profits of corporations? For the tens of thousands of North Carolina textile workers whose jobs are now done by children in foreign countries? For the millions who work for profitable companies but don’t get medical benefits? How good is greed for the residents of West Virginia, whose streams are now spoiled by mountain-top coal mining?

At The Redwoods Group, we exist only because we are able to balance the often conflicting interests of our multiple stakeholders. Here’s how the traditional insuring model works:

- Risk bearers are interested in maximizing profits in order to increase shareholder value.
- Customers are interested in reducing insurance premiums in order to increase expenditures on   operations.
- Employees want to earn more money.

Interestingly, the Redwoods business model requires each of these stakeholders to take a broader view of their relationship with the company. Our risk bearers must believe that we can produce more consistent profits than other operating partners, allowing them to tolerate a more moderate year-over-year return on their capital. Our customers must be convinced that we can add more value to their operations than the typical insurer, so that they may, at times, tolerate slightly higher than average premiums. They must also believe that our approach to the business will yield more consistent premiums, making them more comfortable rejecting the illusory attraction of low-price competitors. Our employees must feel well-compensated in ways beyond salary… they must be committed to the social mission of the company, for example, or must be convinced about the sustainability of the model, which provides employment security at a time when security is at a premium for many.

The model also requires Redwoods to behave in a manner very different from the typical “MGU.” We call it The Redwoods Way.